Strategic Financial Management and Firm Profitability: Evidence from Working Capital Practices in Indian Manufacturing

<title>Abstract</title> <p>This paper focuses on how the working capital management (WCM) affects the profitability of firms of the leading Indian manufacturing sectors, and, in particular, on the heterogeneity in the industry. The research uses Hausman specification test-selected fixed- and random-effects model using ten years of panel data (2016–2025) of listed companies in the automobile sector, FMCGs, health, and capital goods sectors. ROA, ROE and asset turnover ratio are used to measure profitability and receivables efficiency, liquidity and collection periods are used to measure WCM. The results show that WCM has a strong impact on profitability, but the extent and direction depend on various industries, and it would be necessary to implement industry-specific working capital solutions instead of generic policies.</p>